On Our Radar

On Our Radar

'Mr. Euro' Steps In as Greek Finance Minister

Respected economist Yannis Stournaras, who was part of a team that negotiated Greece's entry to the euro, has been appointed as new finance minister, the government announced on Tuesday.

Continue Reading Below

Greece's new conservative-led government scrambled to make a quick decision on the post after their first choice, banker Vassilis Rapanos, quit on Monday on the advice of doctors after spending four days in hospital suffering dizziness and abdominal pains.

His sudden resignation threw the government into confusion at a time when it faces the daunting task of trying to persuade skeptical international lenders to ease the harsh terms of a bailout that has enraged the population.

"Prime Minister Antonis Samaras has decided to name Athens University economics professor ... Yannis Stournaras as finance minister," Samaras's office said in a statement. � Party officials said the three Greek coalition leaders had quickly agreed on Samaras's choice of Stournaras, 55, who is nicknamed "Mr. Euro" in Greece.

Samaras, who is recovering from eye surgery, will meet leaders of his two coalition allies - the Socialist PASOK party and the smaller Democratic Left - at his home later on Tuesday to discuss the government's plans to renegotiate the bailout, a party official said.

The new finance minister faces a difficult juggling act - pushing for more time and money from skeptical foreign lenders while coaxing reluctant officials at home to push through unpopular reforms.

Continue Reading Below

ADVERTISEMENT

"Stournaras is a serious, respected person who will inspire some confidence in the markets. But he is entering a bad government, where many old-style, spendthrift politicians are occupying key positions," said political analyst John Loulis.

"He will have to wage a hard battle against them. He is entering the wolf's lair and he won't survive without the prime minister's solid support."

Stournaras most recently was development minister in the caretaker government that led Greece to elections on June 17.

He is seen as a liberal economist and an ardent supporter of structural reforms to open up the economy and make it more competitive - ideas that are likely to win him favor with Greece's exasperated foreign lenders.

He was chief economic adviser and aide to former Prime Minister Costas Simitis when Greece was negotiating entry to the euro, which it joined in 2001.

DELAYS PILE ON PRESSURE

It was unclear whether Stournaras would be ready to go to a European summit on Thursday and Friday. New Democracy party leader Samaras, who emerged from hospital on Monday with a bandage over one eye, will miss the meeting.

Instead, Greece is likely to be represented by outgoing Finance Minister George Zanias in a delegation headed by President Karolos Papoulias.

The "troika" of EU, European Central Bank and International Monetary Fund lenders, who were due back in Athens on Monday, postponed their trip because of the illnesses of Samaras and Rapanos.

The delays in getting the new government under way have piled even more pressure on Greece's wobbly finances. The country will run out of money next month unless lenders release the next batch of aid under its 130-billion-euro bailout.

That tranche is unlikely to be granted without a showdown with lenders exasperated by Greece's inability to push through vital reforms and its plan to dilute the terms of the austerity programme agreed in exchange for the financial rescue.

The bailout has prevented Greece from going bankrupt and suffering a humiliating exit from the euro zone, but it has also deepened a recession now in its fifth year, left one out of five Greeks jobless and caused violent protests in Athens.

Emboldened by growing anger across Europe against German-led austerity, the Greek government has said it will take its case for renegotiating the bailout conditions to Brussels and the United States as soon as the prime minister is well enough.